Dismay at MHI result

Investors were disappointed with a profitable half-year
result posted by jeweller Michael Hill International
yesterday, as its bottom line failed to reflect the almost
40% share-price gain achieved during the past year.

In a trading update for the six months to the end of
December, MHI's stores in New Zealand, Australia, the United
States and Canada collectively posted an 8.8% gain in
revenue, up from $287.4 million to $312.8 million.

However, MHI stock was down 3.2%, or 4c, at $1.21 after the
announcement, as ''profit takers'' sold stock, Craigs
Investment Partners broker Paul Valk said.

The stock had risen from 87c to $1.25 during the past year,
and shareholders had subsequently expected a better result
for the trading period, Mr Valk said.

''Shareholders had expected a better result. Some profit
takers have been in the market, although in low volumes,'' he
said.

Earnings before interest and tax, which will be fully
reported in mid-February, are forecast at $34 million-$36
million, compared with $34.7 million for previous
corresponding period.

In a statement, MHI chairman Sir Michael Hill said sales
during the ''critical Christmas trading period'' fell short
of expectations and did not deliver the improvement expected,
as all four markets had ''struggled to gain traction''.

Mr Valk said, while all the markets' trading revenues were
up, they were ''largely flat'' with the United States at
0.8%, New Zealand at 3.7% and Australia at 9%.

The Canadian stores delivered a 19.4% rise in revenue, up
from $30.3 million a year ago to $36.2 million.

Mr Valk noted MHI's ''professional care plan'', for jewellery
cleaning and maintenance, saw its revenue added to income
increase from $1.4 million a year ago to $5 million, as the
previously deferred income was added to the balance sheet.